Today's Must Read
Recent Purchase of Brammer Bio Aids Thermo Fisher (TMO).
Focus on Trading Revenues Aid Schwab (SCHW) Amid Rate Cuts
Tuesday, September 3, 2019
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features updated research reports on 16 major stocks, including AT&T (T), Thermo Fisher (TMO) and Schwab (SCHW). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.
AT&T’s shares have gained +10.7% over the past year, outperforming the Zacks Wireless National industry's increase of +7.7%. AT&T is improving critical services that support Public Safety and first responders using the FirstNet communications platform.
The wireless carrier’s LTE network reaches more than 400 million people in North America. It aims to deploy a standards-based, nationwide mobile 5G network in early 2020. AT&T’s 5G Evolution technology is live in more than 200 markets, and is expected to reach more than 400 markets by the end of 2019. It is on track to achieve its target of 2.5x debt-to-EBITDA range by 2019.
However, the Zacks analyst thinks the company is witnessing a steady decline in linear TV subscribers and legacy services. Its wireline division is facing loss in access line due to competitive pressure from Voice over Internet Protocol service providers. As the company tries to woo customers with discounts, freebies and cash credits, margin pressures tend to soar.
Shares of Thermo Fisher have outperformed the Zacks Medical Instruments industry in the past three months (+7.1% vs. +5.6%). The Zacks analyst thinks Thermo Fisher has recently been demonstrating strength in all end markets categorized by customer type or geography. In the second quarter, the company registered solid international performance with growth in Europe and Asia-Pacific including China.
A series of product launches aided its performance. The company’s recent purchase of Brammer Bio in the field of Gene and Cell Therapy is a major positive. Thermo Fisher’s Specialty Diagnostics business, even in the face of the divestment of its anatomical pathology unit, holds immense potential.
The company's raised 2019 guidance looks encouraging. On the flip side, Thermo Fisher’s operating segments are getting impacted by unfavorable business mix. Competitive headwinds and escalating costs pose threat.
Schwab’s shares have underperformed the Zacks Investment Brokers industry over the past six months, declining -16.2% vs. -7.5%. However, the Zacks analyst thinks the company has a decent earnings surprise history. Its earnings have surpassed expectations in three of the trailing four quarters.
The company’s planned acquisition of USAA’s Investment Management Company, efforts to strengthen trading business and improvement in operating efficiency bode well for the future. Additionally, the company’s steady capital deployment actions are commendable and are expected to continue to enhance shareholder value.
Nevertheless, a dismal rate scenario remains a major concern for the company and will likely hamper margin and top-line growth in the upcoming quarters. Rising operating expenses (mainly related to compensation costs and regulatory charges) are likely to hurt bottom-line growth to some extent.
Other noteworthy reports we are featuring today include HEICO (HEI), Veeva Systems (VEEV) and PVH Corp. (PVH).
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Note: Our Director of Research Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>